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Understanding Life Insurance Underwriting

Understanding Life Insurance Underwriting

Life insurance underwriting is a crucial process for determining the risk profile and estimating the premium amount of a policyholder. The underwriting guidelines for insurance companies may differ from one another.
Ningthoujam Sandhyarani
When you purchase any type of insurance quote, be it life, health or motor insurance, you might have come across the underwriting process. Underwriting can be considered as a procedure to scrutinize an applicant, whether he/she is eligible for issuing a life insurance policy under a certain premium amount.

The officials involved in life insurance underwriting (underwriters), consider a series of factors to determine the risk of the applicant for death (especially premature death). Based on the risks involved, the pricing of the insurance quote or premium amount is decided. Here is some information about it.


The guidelines and regulations for underwriting are different for different insurance companies. As already mentioned, this process takes a series of factors into consideration to decide the premium amount for an applicant for a particular coverage policy.

After an individual applies for a life insurance quote, the insurance company circulates a questionnaire that the applicant has to fill up. Underwriting is confidential, which is maintained under strict regulations.

Depending upon the underwriting standards of the insurance company, the questions may vary. Nevertheless some of the common factors for life insurance underwriting are age, sex, height and weight, medical history, marital status, profession or occupation, annual income and personal habits like smoking, alcohol consumption and hobbies. After the applicant fills up the answers to these queries, the form is sent back to the insurance company.

Once the form is received, the underwriters of the life insurance company review the risk profile of the applicant and accordingly, the final premium amount is charged to the policyholder. In general there are four categories of risks, which are classified according to the standard underwriting guidelines.

The four risk classifications include preferred (charge with low premium), standard (standard premium amount), rated (relatively high premium amount) and declined (uninsurable). This way, life insurance underwriting process is a crucial step to calculate the premium amount for policyholders.

For better understanding, let's take an example of two individuals applying for the same life insurance quote. Let's consider that first is below 30 years without any underlying health condition (low death risk), while the second applicant is above 45 years with hypertension condition (high death risk).

With underwriting process, the death risks for the two applicants are examined, after which the insurance company charges a low premium for the first applicant (preferred), while charging a higher premium rate for the second policyholder (rated).

It is to be borne in mind that some insurance companies set stringent guidelines for underwriting than others. Therefore, if you do not qualify for low premium life insurance coverage in a particular company, it does not mean that you will not qualify for other company's low premium life insurance quotes.

The best way to get the lowest premium life insurance coverage is to do a thorough research, and gather information about all the insurance policies which come under your budget. Doing so, you can get a good deal after comparing the premium rates, rules and regulations of each company.


For life insurance underwriting jobs, most companies prefer finance background candidates with good communication and computer skills. Career as an insurance underwriter is quite a lucrative option. The pay scale is high, but the professional growth rate is comparatively slow than other jobs. On an average, an underwriter earns more than $50,000, while an experienced professional in a reputed company may earn as high as $80,000 annually.